Good Morning everyone!  I hope you’re enjoying all of the fun summer activities that are out there for you and your family to do.  I’m so excited that we will be having our luau in a couple of weeks, and I just finished buying everything we’ll need for the party!  I love having an annual summer party for friends and family – being able to spend time together and make memories!!  But the one thing I DON’T love about having summer parties is how much debt I wind up with after spending on them!

Paying off Your Debt Faster

I have struggled with debt since I was first on my own and this is completely my fault since my parents taught me well about being responsible financially.  But I’ve learned that I tend to learn things the hard way.  Another thing I’ve learned about myself is that shopping and spending money is something I do as a release or for comfort.  I find that the majority of my debt is from buying gifts or helping other people out and this isn’t something that I want to change – I want to make sure this is the focus of my life going forward.  But I know that I have to find a balance of continuing to be philanthropic while not racking up debt.

Even though I’m not an expert at staying out of debt, I have definitely become somewhat of an expert at GETTING out of debt!  When I’m concentrating on not spending, I pay my debt off like I’m a force of nature!  Every penny goes towards my debt and I feel such a sense of accomplishment when those balances reach zero!  I’m currently in this phase and have paid off 2 accounts in the past 2 months and am now down to one loan and one credit card left to pay off.

Because I have learned what works best over the years, I thought it would be good to share that wisdom for paying off your debt faster and more effectively with you so that you can also take advantage of it.

Steps for Paying off Debt:

1. List out all of your expenses. This should include all debt as well as monthly bills, gas, groceries, and spending money.  If you’re not sure what you spend each month, review a couple months’ worth of bank statements and credit card bills and make a list of what you spend and where you spend it.
2. Make a budget that helps you achieve your goals. If you’re trying to pay off debt, you have to make sure you are putting your money in the most effective places.  This may involve cutting back your bills, or even cutting out certain expenses.  (Refer to the Earning More Money and Saving Money lists below for ways to accomplish this.)  Check out my blog post on Creating a Budget You Can Stick To for tips for creating your budget.
3. Stop using credit cards and cut them up. I know, this one is scary!  But the only way you are going to successfully pay your debt off is if you don’t create new debt.  Besides, you will feel great after you cut those cards up!  One thing to remember is to check with the credit card companies about annual fees so you aren’t paying for a card that you are no longer using!  (**Tip: If you plan on keeping one credit card for emergencies, choose a credit card that does not have an annual fee)
4. Create an emergency savings fund. This will help to prevent having to charge unexpected bills in the future when emergencies strike.  A good starter emergency savings fund would be $1,000.  I find it easiest to use my direct deposit and have my money designated for emergencies automatically put into my savings account so I am not tempted to use it before I move it into that account.
5. Contact your credit card companies and request an interest rate decrease. Some companies will reduce your current interest rate if you request it, especially if you have been making timely payments and are a good customer.  There isn’t any reason to pay more than you have to, and it never hurts to ask.
6. Negotiate your balances. Especially for non-credit card balances like medical bills, call the company and explain that you are trying to pay off the balance and ask if there is any way you would be able to pay a smaller amount if it’s paid in full by a certain date.
7. Consider working with a credit counseling company. Sometimes, there isn’t much you are able to do on your own to reduce the amount of debt you have – especially if you aren’t making enough to pay more than the minimum payments.  A credit counseling service can work with your credit companies to reduce the amount of interest (even if they told you they won’t reduce it!) and even set up a payment plan to pay it off faster.  Try visiting the National Foundation for Credit Counseling’s website to find a reputable credit counseling company near you.
8. Once you have your debt listed out and have worked to reduce the amount you owe, you are ready to move forward with paying off your debt! You can simply start to pay more than the minimum on all of your accounts by making double payments, bi-weekly payments, or paying a certain percentage more than the minimum each month for each account.   However, you will be much more effective if you instead choose to use one of these two methods below for paying your debt off faster and more efficiently.

Stack Method-

List all of your debt out with the interest rates, balances, and monthly minimum payments.  Next, you will focus on paying off the debt with the highest interest rates first.  To do this, you would pay just the monthly minimum payment to all other accounts and put all extra money toward the account with the highest interest rate.  Once that account is paid off, you then put all extra money toward the account with the next highest interest rate and focus on that one.  This continues until all of your debt has been paid off.  This method will save you the most money repaying your debt because it reduces the amount of interest that you are paying.

Snowball Method-

With this method, you will list all of your debt out with the balance and monthly payments.  Next, you will focus on paying off the debt with the smallest balance first.  To do this, you would pay just the monthly minimum payment to all other accounts and put all extra money toward the account with the smallest balance first. Once that account has been paid off, you then put all extra money toward the account with the next smallest balance and focus on that one.  This continues until all of your debt has been paid off.  This method will allow you to feel accomplished as you pay accounts off, as well as pay your debt off faster.

I also wanted to include some ways to increase the amount of money you can put towards your debt, so I’m sharing the following lists with you: 1) Earning More Money, and 2) Saving Money.  I hope these inspire you on how to have more money to put towards your debt.

Earning More Money:

• Find a seasonal job, part-time job, or pick up extra shifts at your regular job. Even if it’s only one day a week, picking up extra work will help boost your income.
• Consider a housesitting, babysitting, or pet sitting gig.
• Cash in your loose change. Go through pockets in your clothing and coats, check under cushions on your furniture, and scour your car for loose change and cash it in at your local bank.  You’ll be amazed at how much change you accumulate!
• Cash out credit card rewards points for cash. You can even use them to help pay down that card’s balance in most cases!
• Earn money online. There are several sites that you can earn money when you shop online or for completing specific tasks:
  • eBates pays you money when you shop online from through their website at popular stores
  • Ibotta pays you money on rebates for grocery items you are buying
  • MyPoints lets you earn cash back or gift cards when you shop at participating stores
  • Walmart Savings Catcher app lets you earn money by scanning your Walmart receipt and comparing it to the sales and deals at competitor’s stores for the items you bought
  • Shoptracker pays you money each month for sharing your Amazon purchase history
  • Swagbucks pays you for shopping online, but they also pay you to take surveys and watch video ads
  • VIP Voice pays you to take surveys
  • Ipsos Panel pays you to take surveys
• Sell your services online at Fiverr.com. There are so many services you can sell at Fiverr:  social media marketing, video work, editing, promoting a book or product on your website, translation, the list is endless!  If you have a skill or talent, consider selling your services through Fiverr.
• Sell items from your home that you no longer use or need. You can plan a large yard sale at your home or sell items through different online groups. (**Tip: be sure to follow safe practices for meeting strangers when selling items, such as meeting in a public place, bringing another person with you, and letting friends or family know where and when you’ll be meeting someone to sell an item)
  • Facebook yard sale sites
  • eBay
  • Craigslist
  • Letgo
  • Decluttr

Saving Money:

• Cut spending back. Take a good look at your expenses and decide which expenses are actual needs and which are wants.  Then start cutting some of the wants.  Here are some great ways to cut back on your spending:
  • Don’t eat lunch out, pack your lunch instead. Make it something special and eat out once a month for lunch
  • Cut back on eating meals out as entertainment. Again, make it something special once a month
  • Make coffee at home instead of buying it out. You can pick up flavors and creamer to still make your morning cup of coffee enjoyable at a fraction of the cost.
  • Cut out gym memberships, Netflix, magazine subscriptions, etc.
• Cut out cable or satellite TV. You will still be able to watch DVD’s and it’s cheaper to rent a movie from the Redbox for $1.00 than paying a monthly cable bill.
• Check into changing to services such as Hulu, Vudo, Amazon Prime, Playstation TV, Sling or Netflix that can reduce how much you pay on TV each month.
• Reduce your cable plan. If you can’t think about doing away with cable or satellite TV completely, contact your provider to see about reducing what your plan entails to reduce your monthly payment.
• Reduce your monthly cell phone bill. Contact your cell provider and ask if there are any cheaper plans or discounts you can take advantage of.  They aren’t going to advertise the best deals for existing customers – you have to ask for them.
• Reduce your monthly electric bill. Contact your power provider and ask about their budget plan.  They can review your usage history and see if it will reduce your monthly bill significantly or not so you can decide if this is worth making the change.
• Cut your grocery bill by $25 a month. This shouldn’t feel like a drastic reduction, but it will help you start finding things you can cut out to save more money each month.
• Enjoy a No Spend Month Challenge – January is ideal after spending money on the holidays, but this can be done any time throughout the year. Intimidated by this idea?  Start small with a No Spend Week Challenge.  Follow the steps shared by livingasunshinelife.com for how to start your challenge.
• Carpool to work. This will let you save on gas as well as vehicle maintenance costs as you cut back on wear-and-tear on your vehicle.
• Check into tax deductions and credits and ensure you are getting the most back at tax time.
• Eat out for lunch instead of dinner for date-night to reduce the amount you spend when you treat yourself to a meal out.
• Search Groupon for deals on activities that you plan on doing so you can save money and still enjoy your time.
• Consider free entertainment ideas, such as:
  • Take a nature walk
  • Window shop
  • Go to a matinee instead of a late movie
  • Plan a game night with friends and family
  • Have a movie night in your home
  • Go to your local animal shelter and visit with the animals waiting for homes
  • Play outside with the kids – either in your own yard or at the park
  • Go for a picnic

I’m excited for you to start to see those balances get smaller and feel accomplished as you reach your goals!  These are just a few of the great tips you can follow, and I’d love to hear what ideas you enjoy using so please comment below to share your tricks with us.  And don’t forget to share this post on your social media sites so your friends and family can take advantage of these tips as well!